Customs fingers Obasanjo, Ciroma in fuel subsidy scam

January 18, 2012 / Premium Times

Customs says it was compelled for years to clear imported petroleum products without documentation

The Nigeria Customs Service on Tuesday said what evolved into a monumental fraud in the management of the funds earmarked for fuel subsidy developed its root while former President Olusegun Obasanjo was in power and Adamu Ciroma was finance minister.

Testifying before a House of Representatives hearing on the management of funds allocated for fuel subsidy, customs officials said fuel importation procedures turned messy in 2002, a year to the end of Mr. Obasanjo's first term in office, when Mr. Ciroma's ministry directed customs to allow importers bring in fuel without documentation.

Julius Ndubuisi, a deputy comptroller general of customs, who appeared before the committee, said his service was “warned” sometime in 2002, by the federal ministry of finance, in a letter, not to press for documentations for petroleum imports to “avoid crisis.”

Such an arrangement, lawmakers believe, which allowed importation of undocumented petroleum products into Nigeria, triggered the era of manipulations in the payment of government subsidy.

The customs boss said the situation had not changed even today.

While the directive lasted, Mr. Ndubuisi said, importers had a field day as uninvoiced and undocumented refined petroleum imports were forced through Customs checkpoints at Nigerian ports.

The customs official's revelation has opened a new vista into the elaborate web of complications surrounding the importation and clearance of petroleum products annually, and government’s payment of trillions of naira in subsidy.

At the center of it all is the government-run Nigerian National Petroleum Corporation(NNPC).

Besides the relatively known allegations that it facilitated overpayments of subsidy accruals, the corporation has been indicted by several reports and government officials, for maintaining a near-zero documentation of its petroleum imports, and the subsidy deductions it makes each year.

There are those, including former petroleum minister, Tam David-West, who argue that the subsidy payments - an enormous yoke borne by several administrations - do not exist, but that corruption does, with trillions of naira trickling into private pockets annually.

The customs service, , one of the key government institutions to testify, said the whole process of importation and clearance of petroleum products at the ports, and subsequent payments and deductions, were usually done in a mesh of secrecy, with a greater portion of the operations shielded from its officials.

A salient example is the non-existence of documentation and invoice of the imports, critical requirements before goods are cleared. Since 2002, the NNPC and affiliate agencies blatantly refused to provide documentations for the quantity of the imported refined products and efforts to get them to comply were resisted, the official said.

“In the case of imported PMS for example, there is documentation, the CBN excluded the product issuance. The only document attached during clearance is bill of landing that’s all,” said Mr. Ndubuisi, who represented the comptroller general at the hearing.

“Let me make it abundantly clear that whether goods are to pay duties or not, normal documentation has to be done. As we speak importations of PMS has no documentation. In fact the level of documentation we have is only by private marketers.”

The Customs said when it insisted that the laws be followed, several meetings were held between the ministry of finance, Central Bank of Nigeria and the Customs Service, after which it was “warned’ in a letter from the ministry to steer clear.

“A technical committee of the CBN wrote to instruct us not to ask for those documentations. Circulars are here. The Federal Ministry of Finance also reinforced it when we insisted that extant guideline for import should be complied with. Among other things said was, enforcing it will cause crisis in the supply of petroleum products,” Mr. Ndubuisi told the lawmakers.

The Customs representative said as key as its services are to importation, the body had not idea of the quantity of imported products in the years past and can not vouch for actual presence of products in vessels that berthed at the Nigerian ports.

The remarks appear an indictment of the executive arm of government, and in particular, the ministry of finance, in the indiscretions within the petroleum sector as it involves the NNPC and affiliate bodies.

Current finance minister, Ngozi Okonjo-Iweala, has repeatedly distanced the ministry from alleged misdeeds of the NNPC, particularly with respect to the arbitrary deductions of the subsidy at source by the corporation.

When the said letter was issued in 2002, Mr. Ciroma headed the ministry under the Obasanjo administration.

When contacted on Tuesday, Mr. Ciroma, a former governor of the Central Bank, denied any wronging.

Although he said he knew nothing about what transpired at the House, he insisted he complied with the law in all actions he took while in office.

“It is not possible," he told Premium Times on the telephone. "I don’t know what happened at the House of Representatives. Nevertheless we always acted according to the law. In principle, we did things were according to the law. We belonged to the old way of doing things,” he said.

He added: “We never followed anyone’s interest, not even the interest of Obasanjo.”

Mr. Obasanjo could not be reached for comments. Calls to his mobile telephone failed to connect.